Syngenta Jumps 15% Amid News Of Monsanto Bid

Shares of Swiss-based Syngenta AG (ADR) SYT jumped approximately 15 percent in pre-market trading following news that it rejected a $45 billion takeover bid from Monsanto Company MON, according to a Wall Street Journal report.

The proposed price implied a deal worth approximately 41.7 billion francs based on Syngenta’s outstanding shares.

Syngenta’s board of directors rejected the proposal because it undervalued the company, the potential for scrutiny if Monsanto attempted a tax inversion as part of the deal by moving its tax home to Europe and the potential for antitrust concerns in countries where the two compete.

“The combination of Syngenta and St. Louis-based Monsanto would create an agricultural behemoth with combined annual revenue of roughly $31 billion. Syngenta specializes in chemicals used to protect crops and enhance yield, while Monsanto makes genetically modified crops, although the companies overlap in some areas,” according to the report.

Andreas Ruhlmann of IG Bank suggested in the report that a rising U.S. dollar could allow Monsanto to improve its offer later if the dollar resumed its uptrend and was back above parity with the Swiss franc.

If a deal was pursued, it “would come as both companies struggle to right their businesses” amid lawsuits over genetically modified crops, Syngenta’s drop in profits over the past two years, and a cost-cutting program in 2014 that was expected save Syngenta $1 billion annually by 2018, the report noted.

Following Friday’s open, Syngenta AG (ADR) traded at $86.50, up 12.34 percent.